Portugal has raided €5.6bn (£4.8bn) of pension fund assets in a controversial
scramble to meet its deficit targets.

The cabinet agreed to transfer the assets from four of Portugal’s biggest banks to the state balance sheet.

The assets will be used to bridge a gap needed to meet the fiscal deficit target of 5.9pc of GDP set by the terms of the country’s €78bn bail-out from around 10pc in 2010.

"This measure is more than sufficient to meet the budget deficit goal in 2011," said Helder Rosalino, secretary of state for central administration, on Friday.

Portugal said it had informed the EU and IMF and assured them it would be a “one-off”. However the 2010 budget was met by shifting three pension plans from Portugal Telecom on to the public social security system. The liabilities don’t count, yet.

There have been no complaints from Eurostat but Raoul Ruperal from Open Europe said: “This can’t be seen as a future revenue stream in any way.”